Managing inventory is a key part of any business, especially Amazon sellers. Amazon makes $17 million per hour in sales, which means a significant amount of stock is shifted every minute. For small sellers, inventory management is a crucial part of keeping your business afloat, even amidst the rapid turnover that Amazon provides.
This guide covers everything you need to know about Amazon inventory management, so you can achieve ultimate success as an Amazon seller. Whatever you sell on Amazon, here’s how to master your inventory control.
What Is an Inventory Management System?
An inventory management system is the way you track your goods throughout the supply chain, from production or purchasing to end sales. Basically, it refers to the way you keep track of your inventory.
Back in the day, inventory management systems were simply a matter of balancing the books and keeping track of goods with good old-fashioned paper and pen. However, in the world of e-commerce, there is now an extensive range of inventory management tools to help you in the process.
These range from simple, free tools to complex inventory management software, giving you the freedom and choice to find a system that suits your budget.
For example, Eleanor owns an Amazon online arbitrage business selling bath products. She has several suppliers that sell her items in bulk. Eleanor creates a Microsoft Excel spreadsheet to track inventory, updating it whenever she orders new stock or completes a sale. This is Eleanor’s inventory management system, and it helps her track stock levels, expiry dates, and movement of goods.
Why Sellers Need an Amazon Inventory Management Solution
All Amazon sellers need an inventory management system of some kind. Without an Amazon inventory management system, you will quickly run into problems. Whether it’s overstocking or understocking, you can end up damaging your bottom line.
An inventory management system means you are in an excellent position to make your business flourish.
The Risks of Poor Inventory Management
Bad Amazon inventory management can lead to several issues, including:
- Excess inventory: Amazon considers 90+ days of inventory (or 90+ day-old stock) as excess inventory. This ties up your resources and increases your storage fees.
- Low stock levels: On the flip side, low levels prevent you from growing because you can’t meet customer demand.
- Stranded or dead stock: Lost sales, lost storage capacity, and high storage fees are all consequences of stranded stock, which refers to storing goods you can’t shift.
- Spoilage: Depending on what you sell, there is a risk of stranded inventory passing its expiry date.
With increased fees and fewer opportunities to grow your business, finding inventory management systems that suit you is crucial.
9 Tips for Inventory Management
Inventory management does not have to be impossibly complicated. Here are nine key tips to keep your business operations running smoothly.
1. Build Strong Supplier Relationships
Firstly, building solid relationships with your suppliers is crucial, ensuring that they update your supply chain consistently. A few ways to sustain these relationships include:
- Communicating frequently and respectfully
- Paying bills on time
- Referring their business to foster goodwill
With strong relationships, you’ll get your stock on time and anticipate any manufacturing issues in a timely manner.
2. Monitor Your Sell-Through Rate
Ideally, you want an even balance of incoming and outgoing stock. Sales forecasting can help you with this, helping you maintain a strong sell-through rate.
With most Amazon inventory management software, you can carefully balance this so that you don’t stock more than you can sell.
3. Restock Quickly
You need to stock enough products to meet customer demand. Monitoring sales volume means you can plan how much inventory you need throughout the year, including during busier periods. It’s important to restock quickly so that you can always meet demand.
You also need to avoid falling into the “hot product” trap, which means assuming customers will wait around for out-of-stock products just because they’re famous. Keeping enough stock means you will impress new and returning customers alike, boosting your brand reputation.
4. Run Promotions for Aging Inventory
Aging inventory can lead to spoilage, but it increases storage fees even on products without expiry dates. Using your Amazon inventory management software, keep track of stock age and run promotions to get rid of older items.
Amazon has a full inventory performance index to provide custom recommendations about liquidating stock and removing certain items.
5. Use a Leads List
For drop-shippers and online arbitrage stores, using a leads list is a great way to find new suppliers or potential customers. Seven-figure businesses frequently use leads lists in this way, helping them increase stock levels, add new stock, and get rid of old stock.
Whatever you need, leads lists are a great way to manage Amazon inventory levels. Find out more.
6. Watch Your Margins
Strong sales margins are a sign of your business’s success. Make sure you track everything, including the cost of goods, shipping, storage, Amazon fulfillment centers, and other operating costs. If you’re in the green, you’re doing well.
7. Reduce Excess Inventory
If you have too much inventory, it’s time to get rid of it. Selling goods for less than you envisioned might be disappointing, but it’s a part of inventory management. At the end of the day, it helps you avoid sunk costs from stocking items and taking up storage space.
8. Keep Four Weeks of Inventory Cover
In this day and age, fast delivery is key. Sellers who want to keep up with the demands of Amazon Prime will see great results. Let’s say you sell the same product as your competitor, but you offer Prime next-day delivery, and they don’t. Who will the customer choose?
As a result, you should generally have enough inventory to cover a four-week period. This is the sweet spot, providing time to distribute inventory, fulfil orders quickly, and minimize stock shortages.
9. Use the Right Inventory Management Software
Finally, you can use Amazon inventory management software to help you stay ahead. Inventory management software comes in all shapes and sizes, and there’s usually something to suit all budgets.
The below section covers inventory software in more detail.
What Is Inventory Management Software?
Inventory management software involves using computer applications to track, control, and optimize your inventory across multiple sales channels. Typically, a centralized inventory management system will work with Amazon, providing you with tools to manage your inventory throughout the supply chain efficiently.
Most inventory software uses similar features, including:
- Inventory tracking
- Purchase order management
- Stock optimization
- Data to help you manage warehouse space
- Sales and order management
- Reporting and analytics
- Integration with other systems
It’s important to research each Amazon inventory management software thoroughly to decide what’s best for you.
Why Use Inventory Management Software?
The primary benefits of using inventory management software include improved accuracy in inventory tracking, reduced carrying costs, optimized stock levels, streamlined procurement and order fulfillment processes, and enhanced overall operational efficiency.
Yes, Amazon Seller Central gives you some insights into your sales, but if you want to track inventory data across multiple channels, you need a more sophisticated inventory system.
It’s important to note that inventory management software solutions can vary in terms of complexity and functionality, catering to the specific needs and scale of different businesses. Some solutions may be more suitable for small businesses with basic inventory management needs, while others may offer advanced features for larger enterprises with complex supply chains.
Higher Inventory Visibility
Good inventory management systems let you monitor your inventory in real time, meaning you can see specific items and SKUs and monitor their performances.
An Amazon inventory management system allows you to make up-to-date decisions, but some software also automates processes for you. An AI-powered inventory management tool allows you to focus on things beyond managing warehouse inventory, such as monitoring across multiple sales channels, helping with price changes, and reordering things when you meet certain thresholds.
Improved Customer Service
The best Amazon inventory management software also helps you improve your customer service. From managing returns to prompting product reviews, these tools create a better shopping experience. Feedback Express, for example, is an automated software that uses the same system as the “Request a Review” feature in Seller Central. Armed with automated user feedback that you don’t have to chase up, you can take your Amazon business to the next level.
11 Best Amazon Inventory Management Software Options
There are endless options for Amazon inventory management. However, each one is different and brings something new to the table. Most options have options for free data migration and offer efficient management for your Amazon supply chain. Here are our top picks for any ecommerce business to find the right inventory management system.
SkyVault is a tool that manages the full inventory management process for a variety of sales channels, including Amazon.
- Supports multiple locations to eliminate physically moving products
- Advanced reporting and data-led analytics
- Easy-to-use interface
Price: From $359 per month
Linnworks is great for any ecommerce business looking to monitor inventory levels across multiple sales channels. For Amazon inventory management, Linnworks has bulk listing updates, automated workflows to retain your Amazon sellers’ status, and integration with Amazon shipping labels. You can even call the company for a free demo.
- Options to set B2B prices
- Avoids overselling
- Helps you scale to new Amazon markets
Price: Available on request
Orderhive is a cost-effective software solution in terms of inventory management tools. The software’s main selling point is the chance to automate your workflows for proper inventory management.
- Automated order sync across sales channels
- Smart inventory control tools to minimize errors
- Amazon Seller Fulfilled Prime Orders
Price: Available upon request
As far as Amazon inventory management tools go, BrightPearl is consistently highly rated. The site connects all your sales channels to sync your full inventory data, orders, payments, and shipping all in one place. This eliminates the risk of overselling and helps to optimize your sales potential.
- Utilizes fulfillment by Amazon (FBA) to speed up the process
- Aims to improve your perfect order percentage to improve customer satisfaction
- Inventory levels forecasting
Price: Available upon request
Forecast, run by Amazon itself, is awash with various inventory forecasting and management features. It calls itself an “FBA crystal ball,” utilizing advanced machine learning for optimal inventory management processes. If forecasting is a major issue for your ecommerce business, then this Amazon inventory management software is your best bet.
- Trend forecasting across your whole Amazon inventory or specific items
- Explanations of forecasts
- Rapid onboarding
Price: Dependent on usage
Expandly is designed with different sales channels in mind, helping you oversee the entire inventory management process. It has a central interface for multi-channel inventory management, helping you maintain optimal inventory levels wherever you’re selling.
- Automatically sync stock
- Manage kits and bundles automatically
- Manage returns
Price: From $175 per month
Veeqo is perhaps the cheapest inventory management tool on the list, but it still comes with lots of exciting inventory management features. For example, being able to pick and pack from your mobile device.
- Data-driven forecasting
- Update stock from desktop or mobile
- Detailed reporting
According to Sellbrite, it’s the easiest way to list and sell products through large online stores like Amazon. Indeed, the software is easy to use and lets you manage your inventory all in one place.
- FBA inventory management
- Bulk list products to the marketplace
- Update listings in bulk
Price: Free plan available
Appath is a full Amazon inventory management system, with some great features including bundling, multi-warehousing, and more.
- Dropshipping features
- Cloud-based software to manage your inventory from anywhere
- Multiwarehousing to make use of Amazon’s fulfillment centers
Price: From $15 per month
With over 1000 happy businesses selling on Amazon with SoStocked, this is one of the better Amazon inventory management tools for forecasting. The forecasts take account of seasonality, past sales, and future marketing plans. It can let you know if you’re likely to encounter lost sales or stock-outs. There’s a 30-day free trial, too.
- Reorder alerts and advanced replenishment statistics
- Factors in sales spikes
- Easy order tracking
Price: From $158 per month
11. Refunds Manager
With FBA inventory, there’s a risk of it going missing, resulting in lost sales. However, Amazon sellers are eligible for reimbursement when this happens. Refunds Manager is one of several software solutions designed to help to get the correct refund without spending all your time on it. So, if an Amazon fulfillment center loses track, you don’t lose out.
- Commission-based, with no monthly fees
- Audited by Amazon
- Transaction reconciliation
Price: Depends on usage
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The top questions on inventory management tools.
1. What’s the Simplest Way to Manage Inventory?
The simplest way to manage inventory is by using Amazon inventory management tools. These tools help you track stock levels, automate your processes, and provide real-time insights. Some of them also track across different sales channels, ensuring you can scale your business operations no matter where you sell.
2. What Does an Inventory Management System Do?
Inventory management software helps you track, control, and optimize inventory levels. It enables you to streamline your operations and keep track of your Amazon inventory easily, while reducing costs and improving your bottom line.
3. What Is Inventory Control?
Inventory control refers to overseeing and managing stock. It involves maintaining the correct quantity to meet customer demands while minimizing costs and optimizing operational efficiency. The goal of inventory control is to strike a balance between having enough inventory to fulfill customer demand and avoiding carrying excess inventory that ties up capital or leads to waste.